Think like a big dog …

Whether you’re an active real estate investor out there finding and managing deals in your own account …

… or you’re a passive investor looking to invest in someone else’s deals …

… or you’re a syndicator putting together deals on behalf of your passive investors …

… it can be smart to think like a big dog.

After all, major players have big research and due diligence budgets.  They hire big brains to study the market and make smart strategic decisions.

YOU can learn a LOT … just by watching what they’re doing.

Sometimes you can get in front of a big wave they’re about to create and ride it.

And sometimes you can front run them … buying what they want BEFORE they get there … selling to them at a premium when they arrive.

(We think there could be a particularly good opportunity to get in position to do this in the residential assisted living space right now.)

So even though you can’t play at their level, you can still get in the game by paying attention and being more nimble.

For example, this headline caught our attention …

Apollo is Targeting $1 Billion for U.S. Real Estate Fund Bloomberg 11/20/18

Apollo Global Management LLC has started talking to investors about its third U.S. real estate fund …

Hmmmm … $ 1 billion is a chunk of change.  And apparently it’s not their first rodeo.

In fact, Apollo has been around since 1990 and has over $270 billion under management.

Not that we’re promoting or vouching for them.  We’re just saying it seems like they’re qualified to have an opinion about investing.

So back to the article …

“Investment will be in senior housing, hotels, retail”

A little deeper down we discover … in addition to these three … Apollo is also into industrial real estate and manufactured housing.

Of course, this doesn’t come as a big surprise to us or our long-time followers.

We’ve been paying attention to sub-niches in senior housinghotelsretail,industrial and manufactured housing for quite some time.

But even though it’s affirming to have a big dog like Apollo see what we see … it’s not like we’re geniuses.

The clues in the news, trends, data, and our discussions with our boots-on-the-ground contributors make it easy to see the opportunities.

Of course, seeing the opportunity and knowing someone in the space … is just the beginning.

It’s also important to think about your personal investment philosophy … build great relationships with a solid team … and structure things to endure in both good times and bad.

Recently, the wild ride in the stock market is reminding 401k owners how fickle paper equity can be.

It’s no surprise smart fund managers are looking to real estate as a way to find high risk-adjusted returns … and stability in a volatile world.

Right now, we’re watching Wall Street investors race each other to the exits … leaving a flood of red in their wake.

And while history doesn’t necessarily repeat itself, it often rhymes.

Remember, after the dotcom bust at the turn of the century … frightened capital found a safe haven in real estate.  It just might be happening again.

For those already there, it could make for a fun ride.

Until next time … good investing!


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10/21/12: Property Possible – Repositioning Assets for Better Profits

Rehabbing is all the rage right now. The opportunity to snap up distressed properties, pretty them up and sell them for a quick profit has probably never been better, and lots of newbies and Mom & Pop investors have jumped on the bandwagon.  Heck, the opportunity is so good in single family homes that even big Wall Street private equity firms are gobbling up inventory in some of the markets most devastated by the financial crisis.

Now rapid fire rehabbing is hardly “passive investing”.  There’s certainly nothing “passive” about it – and one could argue that true “investing” is making the money do the work, not you.  So we contend that rehabbing is more of a business than an investment strategy.  But that’s beside the point.

If you decide to be in the business of forcing value into your properties, whatever property type you’re in to, then you’ll like this session because we have a couple of very experienced “turnaround” specialists on the microphones.

In the house for this episode of The Real Estate Guys™ radio show:

  • Possibly the finest host, Robert Helms
  • Your impossible co-host, Russell Gray
  • Hotel Impossible star and hotel turnaround expert, Anthony Melchiorri
  • General manager of the 21c Museum Hotels, Craig Greenberg

No matter what kind of income property you own, success is all about occupancy.  But if you think it’s hard work to turn over a tenancy every six months, try doing it every night!  That’s the challenge every hotel operator faces.

Now even if you aren’t in the hotel business and never plan to be, there are great lessons to be learned from those who are.  Because at the end of the day, when you pretty up a property, you do it to please another person: the home buyer or the tenant.  No one knows more about the importance of pleasing the customer than people in hospitality.

So lesson #1 is to be sure you prep the property properly to optimize it’s appeal to your target customer.  Of course, this pre-supposes that you are clear on who your target customer is, what they want and what they’re willing to pay for it.

If you’ve ever watched an episode of Hotel Impossible, you know that Anthony Melchiorri helps owners see their properties through the eyes of the customers.  What a powerful, but sadly overlooked concept!  Property owners often create a property that pleases them. Oops. They aren’t the customer!

You’ve probably also noticed that Anthony often discovers what the customer wants by talking to the staff.  Why?  Because when the customer expresses their need or dissatisfaction, the staff are the first ones to know.  So a wise owner listens carefully to the feedback from the staff to respond quickly and accurately to the needs and wants of the customer.

Do these concepts apply to other kinds of real estate investing?  Of course they do.

If you’re a fix and flipper, your real estate broker is a great source of information about what the market wants and what they’re willing to pay.  Doesn’t it make sense to listen to your broker?  Say yes because that’s the answer.  Yet, so many flippers go to the market with their own need, instead of focusing on the needs of the market.

News flash:  the market couldn’t care less about your need.  If you want to make money, you need to give the market what it wants.

Whether you rent our single family homes, apartments or office space, your property manager and leasing agents will tell you what the market wants.  Once again, it pays to listen.

“Well, that’s just common sense,” you might say.  Yes it is.  But have you ever known someone to buy a property in an area they don’t know and then go find a property manager to manage it?  It happens all the time.  Wouldn’t it be smarter to have the property manager tell you what kind of property, location, amenities, etc. is most in demand, and then go buy that?

You get the idea.  There’s a lot of real estate wisdom to be gleaned from the hospitality business.

And while our second guest isn’t as famous as Anthony, his story is every bit as enlightening.  Craig Greenberg takes old, dilapidated “historic” properties and adds a unique attraction to bring people and their money into the property.  It’s a fascinating study in creativity and one you can learn from.

So listen in as we talk to Anthony Melchiorri and Craig Greenberg and glean valuable lessons from their experiences in finding ways to extract more profit from problem properties.

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